A smartphone that displays the Uber app in London.
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Following the loss of a major labor battle in the UK, Uber will reclassify all drivers in the UK as workers.
Under the new designation, more than 70,000 drivers will receive some benefits, including the minimum wage, time off and pension contributions, but will not receive full employee benefits.
Uber announced the change to an SEC record, adding that its UK road transport business accounted for 6.4% of total gross mobility bookings in the fourth quarter of 2020.
While this move will increase Uber costs in the UK, the company is still aiming for adjusted EBITDA profitability by the end of the year.
Earlier this year, Uber lost a major legal battle in the UK over the issue. The country’s Supreme Court upheld a ruling that a group of drivers were workers, not independent contractors. While the decision applied to a small group of drivers, thousands more took action against the company.
In an opinion published in The Evening Standard, Uber CEO Dara Khosrowshahi wrote that, following the Supreme Court decision, “we could have continued to challenge the rights of drivers to any of these protections in court. Instead, we decided to turn the page. “
Khosrowshahi admits: “I know that many observers will not hit us in the back because we took this step, which comes after a five-year legal battle. They have a point, although I hope that the path we have chosen shows our desire to change. “
Meanwhile, Uber and the gig economy as a whole are facing regulatory challenges around the world. Uber has spent millions of people struggling with these challenges in other regions.
In California, Uber has pushed back against Assembly Bill 5, a concert economy law passed by the state legislature in 2019 that tightened rules for classifying workers as independent contractors.
After a large-scale campaign costing more than $ 200 million – the most expensive voting measure in the state’s history – Uber and a handful of other concert economy companies persuaded voters to support a voting measure called Proposition 22, which exempted Uber and other concert economy platforms. from the state labor law.
In turn, concert workers received some benefits without full employment status. Some of the additional costs for providing benefits have been passed on to traveling customers.